updated 5/1/2008 12:40:57 PM ET 2008-05-01T16:40:57

Guests: Chuck Todd, John Harwood, Jim Miklaszewski, Margaret Brennan, Steve McMahon, Mike Paul, Michael O‘Hanlon, Aaron David Miller, Deborah Mathis, Joan Walsh, Jeanne Cummings

CHRIS MATTHEWS, HOST:  (NO SOUND OR PICTURE)

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL.  Will the Jeremiah Wright story become a perpetual distraction, as Barack Obama fears it might?  Today Senator Obama went public again to make sure that wouldn‘t happen.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  What he said over the last few days, and you know, in some of the sermons that have been excerpted were unacceptable and weren‘t things that, you know, we believed in or cared about or cared to believe in.  And so I—you know, I made a statement yesterday that was hard to make, but it was what I believed.  And you know, what we want to do now, though, is to make sure that this doesn‘t continue to be a perpetual distraction.

(END VIDEO CLIP)

MATTHEWS:  Boy, Michelle looks sad.  Anyway, we‘ve also got some numbers from the new NBC News/”Wall Street Journal” poll about whether the long Democratic campaign is hurting or helping the candidates.  Let‘s put it this way.  As one of our pollsters put it today, the answer comes with an exclamation point.  This is bad news.  More on all that in a minute.

Also, where have you heard this before?  That ad my opponent just ran against me is unfair.  Well, Clinton ads against Obama, Obama ads against Clinton, and of course, Democratic Party ads against McCain are all over the airwaves right now, and a lot of people are crying foul.  Do they have a point?  We‘ll pick apart the ads in a moment.

And where have you heard this before?  The U.S. says increasingly hostile actions by a Mideast country on the brink of becoming a nuclear power may force the U.S. to take military action.  Well, there time the country is not Iraq, it‘s Iran.  And once again, the U.S. is said to be making plans.  Is it really possible that we‘re headed for yet another showdown in the Mideast?  We‘ll look at that a little later.

And what about a gas tax holiday?  Is it a smart pocketbook political move or just craven political pandering?  That and much more in the “Politics Fix” tonight.  And how many politicians does it take to screw in a lightbulb, or in this case, to fill up a car with gas?  We‘ll fill you in on the gas station follies, we‘re calling it, in tonight‘s HARDBALL “Sideshow.”

But first, Michelle Obama got into the right stuff today on the campaign trail.  Chuck Todd‘s political director for NBC News and John Harwood is CNBC‘s chief Washington correspondent.  Do we have that, Michelle—here she is today, talking to Meredith Vieira on the “Today” show.

(BEGIN VIDEO CLIP)

MEREDITH VIEIRA, “TODAY”:  Michelle, do you feel that the Reverend Wright betrayed your husband?

MICHELLE OBAMA, WIFE OF BARACK OBAMA:  You know, I think that Barack has spoken so clearly and eloquently about this...

VIEIRA:  But do you personally feel...

MICHELLE OBAMA:  I believe that we‘ve got...

VIEIRA:  ... that the reverend betrayed your husband?

MICHELLE OBAMA:  You know what I think, Meredith?  We got to move forward.  You know, this conversation doesn‘t help my kids.  You know, it doesn‘t help kids out there who are looking for us to make decisions and choices about how we‘re going to better fund education.

(END VIDEO CLIP)

MATTHEWS:  Well, Chuck, she didn‘t like this conversation.  It‘s about her and her—basically, her parish priest, in my religion, the pastor of her congregation that she went to for 20 years, who was basically a mentor to her husband for all those years, and now they‘re publicly breaking with the guy and they want him to go away politically.

CHUCK TODD, NBC POLITICAL DIRECTOR:  Right.  And for all we know, she may have had the closer relationship to the congregation, you know, a lot of times, you know, that she may have been the one there—that took her kids there, so...

MATTHEWS:  That‘s often the times in marriages, I think more often than not, that the wife, the mother, tends to pay the most attention to the church-going, the rearing of the children, the religious education.  And she‘s obviously very much invested with this fellow.

TODD:  No.  And it‘s hard to imagine that Obama would have made those statements yesterday without Michelle as sort of a backbone for him on those, saying, You know what?  You‘re right.  This guy has gone over the deep end.  You‘ve got to denounce him.  You‘ve got to reject him.

MATTHEWS:  John Harwood, you‘re very good at analyzing these quite coldly.  This doesn‘t seem to be going away for the weekend, does it.

JOHN HARWOOD, “NEW YORK TIMES,” CNBC CORRESPONDENT:  Well, I think what we saw today from both Barack and Michelle in that clip with Meredith was they‘re attempting to give the same answer, not advance the story, deal with it, because they know that it‘s going to come up, but give as little fuel to this fire as they can and hope that they can get to the bread-and-butter economic issues that he‘s hoping to turn to, to try to get back on track in Indiana.

MATTHEWS:  Well, let‘s take a look at Senator Obama here, answering a question about the Reverend Wright today in Indianapolis.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  I‘m wondering if you could tell us how much of a toll this takes on you to be forced by attacks, sometimes unfair attacks on people, to have to turn your back on people who have been good to you in the past or...

BARACK OBAMA:  Well, look, the—I mean, the situation with Reverend Wright was difficult.  I won‘t lie to you.  You know, he‘s somebody who married us.  He had baptized our children.  He has done good things in terms of building the church.  But frankly, what he said over the last few days, and you know, in some of the sermons that have been excerpted, were unacceptable and weren‘t things that, you know, we believed in or cared about, or cared to believe in.  And so I—you know, I made a statement yesterday that was hard to make, but it was what I believed.  And you know, what we want to do now, though, is to make sure that this doesn‘t continue to be a perpetual distraction.

(END VIDEO CLIP)

MATTHEWS:  Well, Senator Clinton is taking advantage of this and paying attention to it.  She said to Bill O‘Reilly—there‘s the quote—

“He made his views clear, finally.”  She stuck it in.

TODD:  That quote‘s taken out of context.  We‘ve actually gotten a newer version of that quote.  “Time” magazine seemed to have cut off and put a period after “finally.”

MATTHEWS:  Yes.

TODD:  “Finally” apparently is a hesitation that she makes.  So I

think, in print, it looks a little harsher than it is.  She goes on to say

you know, then sort of backs away from what she...

MATTHEWS:  OK.

TODD:  ... whet she wants to say.  Look, I think they‘re very much glad to let him deal with this, that Reverend Wright‘s a distraction.  She gets to pump gas, right?  She gets to sit there and do these gas tax things, which, you know, will make her look like pocketbook—it is really right out of the Bill Clinton playbook from ‘92.  You almost feel like you‘re watching Clinton-Tsongas redux from 1992.

HARWOOD:  And guys, Hillary Clinton can be very confident that Bill O‘Reilly‘s viewers know about Jeremiah Wright, know plenty about Jeremiah Wright.  She doesn‘t have to do that.  She‘s talking to those voters on the terms that she wants to tonight.  Probably a smart move by her to go on the show.

MATTHEWS:  How much of a move do you hear, John Harwood, the so-called “operation chaos” is going to play next Tuesday in Indianapolis, the effort by Rush Limbaugh—the lovable Rush Limbaugh, I must say—to encourage Republicans, registered Republicans, to go vote for Hillary just to cause chaos and perhaps get her the nomination?

HARWOOD:  My suspicion...

MATTHEWS:  How big a role would that be?

HARWOOD:  My suspicion, Chris, is that that‘s a lot more talk than action.  I think there aren‘t that many voters who can be manipulated in that way to go make trouble in a primary election.  And one of the things that‘s striking...

MATTHEWS:  But when you call yourself a “dittohead,” it seems to me you‘ve already defined yourself as someone who is, let‘s put it this way, manipulable.

HARWOOD:  That is true.  And there are some dittoheads who I suspect will respond to Rush, but I‘m just doubting that there are all that many of them to make a big difference in this primary.

And the other point, Chris, is that one of the things that we‘ve seen

and some of these numbers in the “Journal”/NBC poll reflect that—is that this is a race that is so driven by the demographics of the contest, it seems impervious to the events that take place on the trail.  Voter simply don‘t move all that much.  They are where they are, and they get locked in.  And everything that we‘ve seen over the last several weeks suggests that that could be the pattern through the rest of the primaries in early June.

TODD:  I want to echo that with John because we saw that in the Pennsylvania exit poll.  It looked exactly the same as the Ohio exit poll, which took place before the Reverend Wright stuff.

MATTHEWS:  Yes.

TODD:  I looked at the—not to give away the store, but among white voters in the Democratic primary, it‘s breaking 60-40, 61-39.  Well, that‘s what it‘s been breaking...

MATTHEWS:  What about these numbers in our new poll?

(CROSSTALK)

MATTHEWS:  What about this, that people over 65, suburban women, small-town women, are moving against Barack because of the Reverend Wright issues like this?

TODD:  They are, but his coalition is big enough to withstand it for now...

(CROSSTALK)

HARWOOD:  ... ballot move all that much.

TODD:  That‘s right.  Neither one of them have moved the other‘s...

MATTHEWS:  Well, they‘re both suffering from very large unfavorables due to the news.

TODD:  Well, the news is all negative against both of them.  The news is negative, and it‘s actually been—should be positive for McCain, but it‘s negative for him because he‘s got the R next to his name.  And the negative on Bush stuff, I think, weighs down on even McCain a little.

MATTHEWS:  John, let‘s put it all...

(CROSSTALK)

HARWOOD:  ... Chris, the noise is bad for the Democrats, but the news is bad for the Republicans.  And when I say news, I‘m talking about the economic news that is concerning Americans more than we‘ve seen in a long time.

MATTHEWS:  But when you have the Reverend Wright out there, I‘m just wondering whether this isn‘t the best gift that the critics of Barack Obama have had this entire election season because here‘s a soft-spoken guy, who teaches moderation and union and harmony among all peoples, black and white and Hispanic, and he says, We can all work together, and then you have this fellow out here, who‘s still showboating as of this week.  It just seems to be very hard to believe that this is not going to be an albatross right through Indiana.

TODD:  Well, I‘ll tell you...

(CROSSTALK)

HARWOOD:  ... for his opponents.  But Barack Obama is getting very well known on his own terms.  He‘s run a campaign for a pretty long time right now.  People see what he‘s like.  He has a record.  All these things are going to provide some protection.  Barack Obama, as you guys discussed yesterday, got a gift from Jeremiah Wright in term of that showboating earlier in the week, which gave him a pretext, a reason, to really slap right down yesterday and say, This is a different story now, my relationship with him.  The question‘s going to be, How credible is that?  And is he...

MATTHEWS:  Will he lose...

HARWOOD:  Was he simply taking advantage of that opportunity, or was he really taken aback by something that he hadn‘t heard before?

MATTHEWS:  Do you believe that the contrast between he and the other gentleman, Jeremiah Wright, will be so dramatic by next Tuesday that it will begin to benefit him?

TODD:  Well, I‘ll tell you what.  I think there are some in the Obama-world, and I‘ve had others express this to me, that believe that he can go ahead and limp to the nomination because what he was able to do with Wright was able to take something off the general election table.  I talked to a couple Republicans today who are a little nervous, like, Oh, well.  He may have taken that off.  It may be harder to use because he did separate himself.  Now, I heard one Republican...

MATTHEWS:  You mean if John McCain in the middle of a debate says, And what about that Jeremiah Wright character?  He says, Wait a minute...

TODD:  I told you (INAUDIBLE)

MATTHEWS:  ... John, you heard me clearly separate myself from him.

TODD:  I did have one Republican say to me today, I‘d like to hear him answer the question if he‘s going to disown Jeremiah Wright.  You know, they want to get into the sort of, the word games, you know, denounce, remember, we had the “reject and denounce”...

MATTHEWS:  What‘s “disown” mean, besides “denounce”?

TODD:  Yes, I—we‘ll have to go to our dictionaries to get...

(CROSSTALK)

MATTHEWS:  Hillary Clinton made a terrible mistake when she got him to say “denounce” and he did with regard to Farrakhan.

TODD:  And it took Farrakhan out of...

(CROSSTALK)

TODD:  So I do think there are some Republicans that are lamenting the fact that it might be off the table for the general.

MATTHEWS:  These characters that show up in our lives, these extra characters like this, always cause...

TODD:  It‘s like a bad movie.

MATTHEWS:  ... a lot of trouble.  Well, I can think of a number of them.  Anyway, thank you, Chuck Todd.  Thank you, John Harwood.

We‘ll be right back at 7:00 Eastern tonight with more poll numbers, a lot more poll numbers, from the brand-new NBC News/”Wall Street Journal” poll that comes out monthly, and it‘s come out tonight.

Coming up: Six days before the Indiana and North Carolina primaries, and the ad wars are heating up.  And these ads are pretty tough.  And later, much more on Jeremiah Wright and the Obama campaign.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Just six days to go now to the big primaries in Indiana and North Carolina.  Both Democratic presidential candidates are saturating the airwaves with new and tough TV ads.  But who packs the most punch?  Well, Steve McMahon is a Democratic consultant who has done work for the Democratic National Committee and the Democratic Congressional Campaign Committee.  And Mike Paul is a PR consultant who‘s counseled top corporate and government leaders.  He‘s also served in the administration of former mayor Rudolph Giuliani.  Thank you very much for joining us, Mike, and thank you, Steve.

Let‘s take a look, both you gentlemen, at this Obama ad now playing in Indiana.

(BEGIN VIDEO CLIP)

BARACK OBAMA:  All across Indiana and my home state next door, folks know we desperately need change.  Gas here, $4, jobs leaving, health care you can‘t afford.  But the truth is, to fix these things, we‘ve got to do more than change parties in the White House.  We‘ve got to change Washington, stop the bickering, take on the lobbyists, and finally start solving problems instead of just talking about them.  Some people say we can‘t change Washington.  I‘m Barack Obama, and I approved this message to say, on Tuesday, Indiana, you can.

(END VIDEO CLIP)

MATTHEWS:  Let‘s go back and forth, Steve and Mike, both react.  Let‘s do Siskel and Ebert here.

(LAUGHTER)

MATTHEWS:  Go ahead, Steve.

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  It‘s a pretty good ad.  He talks about the problems.  He lays them out pretty effectively.  And it‘s about change, ultimately, because he says you can‘t address these problems without changing Washington.  The place where it maybe is a little bit weak is he doesn‘t say what he would do.

MATTHEWS:  Mike?

MIKE PAUL, PR CONSULTANT:  Well, one of the problems is, one of the tag lines in there is about talking and not having actions.  And obviously, we got to jump to the Reverend Wright situation because a lot of people think if he really wants to end this bleeding, he needs to leave the church.

MATTHEWS:  What‘s that got to do with the ad?

PAUL:  Because it‘s echoing back on talking versus walking.

MATTHEWS:  Are you going to do that...

(CROSSTALK)

MATTHEWS:  Mike, are you going to do this every time I show you an ad? 

You‘re going to bring up Jeremiah Wright?

PAUL:  No, no, no, no, no!

MATTHEWS:  Let‘s try again, see if you do it again.  No, let‘s see if you do it again.  Let‘s take a look.  You first this time.  Let‘s take a look at Hillary‘s ad that‘s running in Indiana.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  My father served in the Navy and ran a small business.  My mother taught Sunday school and took care of us.  I come from Park Ridge, Illinois.  Benefiting from all their hard work and sacrifice, I carry with me not just their dreams but the dreams of people like them all across our country, people who embrace hard work and opportunity, who never waver in the face of adversity, who never stop believing in the promise of America.  It‘s a promise I intend to keep.  I‘m Hillary Clinton, and I approved this message.

(END VIDEO CLIP)

MATTHEWS:  Mike, I thought she was from Scranton.  What happened here?

(LAUGHTER)

MATTHEWS:  Now she‘s from the Midwest, from some farm out there in Idaho or something!  What is going on here?

PAUL:  Well, my...

MATTHEWS:  This woman has more labels on her trunk than Gracie Allen! 

Go ahead.

PAUL:  My roots are with you, and my family is from you.  And you know, I am middle America.  I think that‘s going to be a tough sell.  But you know, if she has the roots, hey, there‘s nothing wrong with her going for it.  We‘ll see if it sticks.

MATTHEWS:  Steve McMahon?

MCMAHON:  I don‘t think it‘s as much about, I am middle America, as it‘s about, I‘m more like you than that other guy.  And that‘s at the end of the day, you know, she‘s appealing to the base of her support, and it‘s probably a pretty effective way for her to do that.

(CROSSTALK)

MATTHEWS:  ... he‘s from rowhouses and sidewalks and not from the country.

MCMAHON:  Well, he‘s—I‘m more like you than the other guy is.  I mean, it‘s not uncommon in politics, but...

MATTHEWS:  Well, I think we got the message.  Here‘s Hillary Clinton‘s out on the economy.  You first, Mike, this time, as well.

(BEGIN VIDEO CLIP)

CLINTON:  I‘m Hillary Clinton, and I approved this message.

UNIDENTIFIED MALE:  The economy‘s in trouble.  When the housing prices broke, Hillary Clinton called for action, a freeze on foreclosures.  Barack Obama said no.  Now gas prices are skyrocketing, and she‘s ready to act again.  Hillary‘s plan?  Use the windfall profits of the oil companies to pay to suspend the gas tax this summer.  Barack Obama says no.  Again.  People are hurting.  It‘s time for a president who‘s ready to take action now.

(END VIDEO CLIP)

MATTHEWS:  Mike?

PAUL:  Well, a bit misleading.  I think, obviously, the Obama campaign has to fill in the blanks as to why no.  But look, she‘s hitting some issues that Americans are concerned about.  Obviously, foreclosures are top news and gas prices are top news.  So that‘s going to resonate.  It‘s almost like the ultimate trial balloon.  Let‘s throw it out there.  It might not stick.  Let‘s talk about the economics.  Obviously, when you talk quantitatively, it‘s difficult for the average American to understand.

(CROSSTALK)

MATTHEWS:  It‘s the topic.  She‘s on gas prices.  He‘s still on Jeremiah Wright.

PAUL:  That‘s right.

MCMAHON:  You can always tell...

PAUL:  You brought it up this time, Chris.

MATTHEWS:  Yes.

MCMAHON:  You can always...

MATTHEWS:  I‘m trying to be fair.  You‘re trying to sell something. 

That‘s the difference.

(LAUGHTER)

MATTHEWS:  Go ahead.

MCMAHON:  You can always tell when a politician does the disclaimer at the beginning of an ad that a sucker punch is coming.  That‘s the best ad of the bunch.  And the reason it‘s the best ad of the bunch is because it does three or four things simultaneously.  It says, Experience matters because experience leads to solutions.  It says that Hillary Clinton on two major issues today, the gas prices and the economy, has solutions that you‘re going to like.  And Barack Obama opposes those solutions.  So he is not just somewhere missing, he‘s on the other side.  This is a very, very good ad.  The Obama campaign needs to be concerned about that.

MATTHEWS:  She—yes, she is tying him in with the oil industry, although it didn‘t come up as a debate, he is defending the oil companies‘ windfall profits, because he doesn‘t want to do what she wants to do. 

MCMAHON:  That‘s the implication, honestly, that he‘s...

MATTHEWS:  Yes. 

MCMAHON:  And not only is he defending her windfall profits, but he is basically not doing anything to address the concerns that everybody is talking about today.  That‘s a very, very good ad.  The Obama campaign...

PAUL:  Well, it works, because he‘s not on message, right?

MATTHEWS:  Even though there are no windfall profits tax receipts right now, Hillary acts like there‘s a big pile of money coming into the federal government right now windfall profits tax, which doesn‘t exist, and that could be used to reduce our price at the pump. 

MCMAHON:  Everybody hears that ExxonMobil makes $10 billion a quarter, so they just think they‘re making too much money.  And that‘s the perception that you leverage.

(CROSSTALK)

MATTHEWS:  So, pandering works here?

(CROSSTALK)

MCMAHON:  Of course it works.  It always works. 

PAUL:  Well, let‘s see if Obama has a good answer for the... 

(CROSSTALK)

MCMAHON:  It‘s politics.

(CROSSTALK)

MATTHEWS:  OK.  Go ahead, Mike.

Does pandering always work, getting back to a generality?  I love these generalities.  Is pandering—you say, I am going to do this for you; I am not going to tell how I‘m going to pay for it—always work in politics?

PAUL:  Well, it doesn‘t always work, because, if you fill in the blanks and you have answers as to why no, and you do it in a layman-like work, then guess what?  Advantage Obama. 

If you‘re off-message because of other issues, and she is able to beat that drum, then advantage Clinton.  Let‘s see how it works. 

(CROSSTALK)

MATTHEWS:  So, he is not on—he is not on—he is not guarding his base out there. 

Let take a look at another Hillary ad.  This one features the great poet Maya Angelou. 

(BEGIN VIDEO CLIP, CLINTON CAMPAIGN AD)

MAYA ANGELOU, POET:  Hillary Clinton, the prayer of every American who really longs for fair play.  Working men and women have had their jobs snatched from underneath them, their home snatched away from them. 

And what we need, I think, is a person, a president who can make a difference in our country.  She intends to help our country become what it can become.  She dares to say, human beings are more alike than we are unalike. 

(CHEERING AND APPLAUSE) 

ANGELOU:  I have watched her become interested in public health and in education for all the children.  And I have watched her stand. 

(CHEERING AND APPLAUSE) 

ANGELOU:  I have found the person I think would be the best president for the United States of America. 

(CHEERING AND APPLAUSE) 

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  I‘m Hillary Clinton, and I approve this message. 

(END VIDEO CLIP)

MATTHEWS:  Well, Steve, that‘s one of the iconic voices in American life—James Earl Jones.  There are a few others, Martin Sheen, I mean, Gene Hackman. 

(CROSSTALK)

MATTHEWS:  That‘s one of the great voices you hear. 

MCMAHON:  I‘m going to reverse myself now.  I said pandering always works.  I don‘t think that is going to work.  But I do think it‘s—it‘s...

MATTHEWS:  Well, it is aimed at African-American women, right?

MCMAHON:  It is aimed at African-American women, and it is sort of the anti-Reverend Wright. 

I mean, if you think about what Maya Angelou represents, it is everything that Reverend Wright doesn‘t represent.  It‘s an African-American woman who is revered.  And—but, ultimately, the ad doesn‘t really say very much.  And it certainly doesn‘t say, here‘s what I am going to do for you. 

MATTHEWS:  OK. 

Your thought, Mike, on this ad?

PAUL:  Well, it does identify health care.  And guess what?  That was one of the things that she didn‘t do such a good job with in the past, has she?  So, those who remember that, it is going to echo that message. 

Look, Maya Angelou is liked by people beyond just African-American women.  The question, is it going to work and how much this ad is actually going to resonate beyond the core that she‘s going after?  I think it is a flash in the pan.  It‘s got a couple of days.  Then we move on.

MATTHEWS:  OK.  Let‘s take a look at the Obama ad.  Here‘s another one. 

(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  Here in America, we live by certain values: hard work, community, keeping your word.  But, today, Washington has got it backwards, trade deals that put profits before people, laws written for and by corporate lobbyists.  We need to stop rewarding companies that export jobs and a war that costs so much in lives and dollars.  Invest in workers here at home. 

I‘m Barack Obama.  And I approve this message to ask for your support on Tuesday, because the change we need in Washington begins with you. 

(END VIDEO CLIP)

MATTHEWS:  Well, that‘s my kind of ad, hard-hitting, attractive, tough.  He is with us against the other side, I mean, from his point of view.  It looked to me like the right kind of ad. 

Your thoughts?

MCMAHON:  I think it is the best ad of the Obama ads that we have seen.  It does—it does change very effectively.  It talks about specifics.  And it goes after issues that people are concerned about and talk around at the dinner table every single night.  It‘s a very good ad.

MATTHEWS:  It is not all music and charming, though.

What do you think, Mike?

PAUL:  In a tough economy, obviously, we‘re talking about jobs.  That is something that resonates with everybody.  I think it was a great ad as well. 

MATTHEWS:  Mike, you‘re a great guest.  Thank you, sir.  I‘m sorry I was a little tough on you, but you know—I know you enjoyed it. 

(LAUGHTER)

MATTHEWS:  Thank you very much, Steve McMahon, Mike Paul.

(LAUGHTER)

MATTHEWS:  Up next:  Who is running the nastier campaign, Hillary Clinton or Barack Obama?  Bill Clinton says—Guess what? -- it is Barack. 

That‘s next on the HARDBALL “Sideshow.”

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

Time now for the HARDBALL “Sideshow.”

Tax ache?  After blaming his accountant for the mistake, Democratic U.S. Senate candidate Al Franken, who is trying to unseat Minnesota Senator Norm Coleman, said he has paid $70,000 in back taxes and penalties owed in various states.  Apparently, Franken had to pay taxes in all those states where he performed in recent years, and didn‘t get it done.  Franken called it a basic kind of error that had a lot of ramifications. 

Who is going to believe you?  Who is going to believe you, me or your lying eyes?  Bill Clinton wants you to believe that Barack Obama has been the one running a nasty campaign, and that Hillary Clinton has been the one running the clean one. 

I‘m not kidding. 

Listen. 

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES:  Most of what people have said in this campaign is wrong, including who has been more positive and who has been more negative. 

She‘s talked relentlessly about the solutions.  She won in Pennsylvania after being hit with negative ad after negative ad after negative ad, and negative letters, and all she did was respond. 

(END VIDEO CLIP)

MATTHEWS:  Just watch that secondary characteristic.  When that finger comes up like that, be careful in believing what you hear. 

The truth is, as anyone watching the campaign knows, Hillary Clinton did a brilliant job of exploiting Barack Obama‘s comment about small-town Pennsylvania.  That‘s not particularly positive or particularly negative.  It was, you have to admit, deadly successful. 

Speaking of Hillary, some Clinton campaign theater today, as she tried to tap into voter anxiety over gasoline prices.  Here she is stopping for gas on a morning commute with a sheet metal plant worker.  Clinton admitted that she hasn‘t pumped her own gas in quite some time.  But it wouldn‘t be proper theater without a grand display of irony. 

A caravan of 10 vehicles accompanied Hillary‘s arrival, including six Chevy Suburbans and a van full of cameramen to properly record the gas event. 

The bottom line, staged events require energy.  They use up a lot of $4-a-gallon gas. 

And now it is time for the HARDBALL “Big Number” tonight.

In case you hadn‘t noticed, this protracted Democratic contest is taking a big toll on the Democratic Party, and in more ways than one.  Not only are Barack Obama and Hillary Clinton beating each other up daily, but the Democratic National Committee is falling behind the Republican National Committee in terms of raising. 

That‘s right.  Even though the candidates, Hillary and Barack, are raising more money than John McCain, “The New York Times” describes DNC fund-raising as anemic. 

Just how much more cash does the Republican National Committee have, compared to the Democratic National Committee, as of the end of this month?  Twenty-six million dollars, just over $5 million for the Democrats—by the way, $26 million, the money gap between the party committees.  That‘s tonight‘s “Big Number.” 

Up next:  Is the Bush administration starting to make a case for war with Iran?  We will get to the latest from the Pentagon, and more on Jeremiah Wright in the “Politics Fix.” 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MARGARET BRENNAN, CNBC CORRESPONDENT:  I am Margaret Brennan with your CNBC “Market Wrap.”

Stocks closed lower, as a rally evaporated following the Federal Reserve‘s decision to cut interest rates again and a hint that they may be done with their rate cut process.  The Dow Jones industrial average finished down 11 points, the S&P 500 off by five, and the Nasdaq seeing a 13-point decline. 

As expected, the Federal Reserve cut a key interest rate cut by a quarter-of-a-point.  That‘s the latest in a series of cuts dating back to last September.  But, in its statement, the Fed hinted that it may pause its rate cuts, but they didn‘t really give a very clear signal.  Gold rallied, and the dollar dropped following that release. 

It also caused oil prices to rebound off their lows late in the day.  But crude was still down more than $2 in New York‘s trading session, closing at $113.46 a barrel. 

Meantime, figures released this morning show that the economy is technically not in a recession, as GDP rose by six-tenths of a percent.

That‘s it from CNBC, America‘s business channel—now back to Chris and HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Is the United States gearing up for an attack on Iran?  NBC News is reporting that the U.S. military is increasingly concerned about Iranian-backed attacks in Iraq, prompting it to send an additional aircraft carrier to the region today.  The military is also working on potential targets on Iranians operating inside of Iraq. 

Is the Bush administration building another case for another war? 

Here to give us an update is MSNBC News Pentagon correspondent Jim Miklaszewski. 

Mik, from everything you know, are we going to war with another Islamic country? 

JIM MIKLASZEWSKI, NBC PENTAGON CORRESPONDENT:  Pentagon and military officials say that is highly unlikely, but they are clearly trying to turn up the heat on Iran by public—by publicly calling them out about their involvement in attacks against Americans in Iraq. 

The bottom line here, Chris, is that U.S. military commanders in Iraq think they are actually winning the war against al Qaeda, that the surge has been a huge success.  But the one—the one indecisive factor in all of this is how much the Iranians can influence the fight in Iraq through their meddling, Quds forces training forces to attack American inside Iraq. 

So, they want to make sure that Iran is at least on notice.  Now, there are targets sets inside Iraq that include weapons factories and some facilities run by those Quds special operations forces.  But we‘re being told that it really is highly unlikely there will be any airstrikes, U.S.  airstrikes, inside Iran, and that, if the U.S. were to step up its offensive operations, it would be against those Quds operatives inside Iraq that are attacking American forces. 

MATTHEWS:  Well, there‘s a theory that has been floating around, Mik, that we‘re going to gin up a war by going after bases in Iran that are supporting those activities by the Quds-supported special groups in Iraq, and that will gin up the war further.  It will escalate.  And then we will end up bombing what we think are the nuclear facilities. 

Do you hear that story? 

MIKLASZEWSKI:  Well, you know, senior administration officials tell me that, even if there were airstrikes against Iran, it would not involve the nuclear facilities. 

But I can tell you, Chris, that Pentagon and military officials are the last ones who want to start another war in the Middle East.  They have got their hands full in Iraq.  They‘re going to have to increase the number of forces in Afghanistan as the Taliban ratchets up their offensive there. 

So, they have got pretty much more than they can handle right now.  They can always launch airstrikes, but, as one senior administration official told me, then what do we do?  That‘s the big question. 

MATTHEWS:  Yes.  The second and third steps. 

MIKLASZEWSKI:  Right. 

MATTHEWS:  Thank you very much, Jim Miklaszewski, at the Pentagon.

Let‘s in Mideast expert Aaron Miller, author of the great new book “The Much Too Promised Land” about the Middle East and, of course, about the Palestinian territories in Israel.  And Michael O‘Hanlon is a senior fellow with the Brookings Institution. 

Let me bring in Aaron. 

Welcome to the show.

Thank you. 

MATTHEWS:  What is your hunch here, based upon knowing administration policy and the politics of this administration?  Are we going to gin up a war with Iran to be the final—the last hurrah of the Bush era?

AARON DAVID MILLER, AUTHOR, “THE MUCH TOO PROMISED LAND”:  Before the NIE, I thought it was about 50/50.  And I think there was cause for some concern.  I don‘t think so now.  I think it is highly unlikely. 

The problem is not a military attack on Iran.  The problem is that we don‘t have an effective strategy for containment, providing disincentives or incentives to deal with perhaps the most important regional actor in the course of the last eight years. 

MATTHEWS:  Let me ask you, Michael, why do we keep hearing from the administration about Iran and from McCain about Iran, John McCain?  It is almost like he wants it to be a proxy war with Iran, our fighting in Iraq.  In fact, it almost seems to be his latest rationale for the war:  We have to defeat Iran in Iraq, or else they win. 

MICHAEL O‘HANLON, SENIOR FELLOW IN FOREIGN POLICY STUDIES, BROOKINGS

INSTITUTION:  Hi, Chris. 

Well, it is true that, as you well know, that Iranian weaponry is killing probably half the Americans who are fatalities in Iraq over the last couple of years.  So, that‘s what is driving a lot of the anger towards Iran.  And you really hear it from a lot of people inside the Pentagon and inside Central Command and so forth. 

But, you know, with Senator McCain, it is very interesting.  I don‘t think there is likely to be an attack over the next year or so myself.  I agree with your other guest. 

But I think that, next year, there will also be an election in Iran.  And if Ahmadinejad wins reelection, and then the next U.S. president cannot increase economic pressure on Iran by working with the international community, and then the Iranian nuclear program is seen to accelerate, who knows what the next U.S. president would do. 

So, it is very apropos that you bring in McCain‘s comments.  Those are actually more important, I believe, than what Bush is saying right now.

MATTHEWS:  Let‘s just flip over to the Democratic side.

Hillary Clinton came out of nowhere the other day and said that we ought to be able to obliterate Iran if it tries anything against its neighbors.  Is that unusual language for a presidential candidate, obliterate?  It sounded like Barry Goldwater to me a bit.

MILLER:  Even in silly season, political season, it seems to me a little bit extreme.

I mean, look, the fact is, you can threaten all you want, but unless you‘re prepared to make good on those threats, we look weak and ineffective.  That‘s really the point.  We‘re like some modern day Gulliver wandering around in a world of small tribes that frankly, Chris, are a lot meaner and tougher than we are.  And we don‘t have an effective strategy. 

The key for the next administration is to come up with an effective strategy, part disincentives, part incentives to deal with a profoundly entitled and insecure state that does in fact threaten American interests and interests of our allies. 

MATTHEWS:  Mike, why do we have an American national interest in whether Iran has influence in Iraq?  I never heard that on the list of things we used to worry about.  Obviously, we want to influence in this hemisphere.  We‘ve always had it over the entire hemisphere.  Large countries tend to have influence on the border.  Why would we think we should have influence in Iraq, as we do with 140,000 troops there and a government we helped put in place—we have huge influence in that country.  We deny the right of Iran to have influence over its neighbor.  What is the basic American justification for taking that stand? 

O‘HANLON:  Chris, it is you‘re right to say there is no inherent problem with Iran having influence in Iraq.  The problem is with Iran destabilizing Iraq.  And what we think we really saw in the last month, especially in Basra and elsewhere, when prime minister al Maliki went after many of the militias down there, was the evidence that Iran had been arming virtually everyone, on the Shia side in particular, and even some group on the Sunni side, and willing perhaps to tolerate a simmering level of low grade civil warfare inside Iraq into the indefinite future.  That‘s what we object to. 

MATTHEWS:  Mike, so the bottom line here from both you gentlemen, because I do think about this a lot and I do wonder about the ideology of the people around John McCain, the neo-conservatives, so called, and the people who have been around President Bush, who are very aggressive in going after Iran, rightly or wrongly.  I just want to be able to make something of a political prediction.  It‘s your prediction, Michael, that we will not strike at Iran before the end of this administration? 

O‘HANLON:  Correct.  That‘s right, Chris. 

MATTHEWS:  Is it yours?  We will not strike against Iran or its territory? 

MILLER:  That‘s right.  After this trillion dollar social science project called Iraq, which has set us up for galactic failure in this part of the world, it seems to me none of the candidates are in a position to argue in any compelling way for a unilateral unprovoked American strategy. 

MATTHEWS:  Some think is that we‘re going to double down and having gone to war in an unpopular setting of Iraq, that we‘ll try to make good on it by going to war with Iran.  Anyway, thank you.  Aaron Miller, thank you.  The name of the book is, “The Too Much Promise Land.”  It‘s obviously about the Palestinian territories, about the state of Israel and the conflict there in.  Thank you very much Aaron and Michael O‘Hanlon. 

Up next, has Barack Obama done all he needs to do to rid himself of that meddlesome priest, Jeremiah Wright?  The politics fix is next.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL and the politics fix.  Tonight‘s round table, Jeanne Cummings of Politico, Deborah Mathis of BlackAmericanWeb.com and Joan Walsh of Salon.  I am outnumbered, pleasantly.  Let me go to the key question of the night, starting with Joan Walsh; is there no way he can rid himself of this meddlesome pastor?  Again today, Michelle Obama came forward and spoke about it.  The candidate himself did, Barack Obama.  They‘re being somewhat nice today.  Do they have to chase this guy away with a stick? 

JOAN WALSH, SALON.COM:  I don‘t think they can, Chris.  I think this guy really speaks for himself.  He is completely out for himself.  I believe he is out to hurt Obama.  And I‘m not sure there is much they can do.  So I think moral persuasion, political persuasion, all of the things they have at their disposal have clearly failed.  And I think Obama has to suffer through.  He did a great job yesterday.  I‘m not sure what more he can and will have to say.  But I think he is stuck with it for a while. 

MATTHEWS:  Deborah? 

DEBORAH MATHIS, BLACKAMERICAWEB.COM:  I get the feeling that Reverend Wright, and who knows what is inside his head—but I am a Baptist minister‘s daughter.  I spent my life around men of the cloth.  I know kind of about the characters.  Some are real characters like Reverend Wright is.  I don‘t think so much that he is out to hurt Barack Obama as much as he is indifferent about hurting Barack Obama.  He doesn‘t care if he does.  I don‘t think that he is taking an aggressive move with design on hurting him, for whatever that‘s worth. 

MATTHEWS:  He thinks he is the center of the universe?  The other guy is not almost president of the United States? 

MATHIS:  Here‘s the thing about it—

MATTHEWS:  He doesn‘t notice? 

MATHIS:  There are some things that are more important than the presidency of the United States, like maybe Christianity or maybe the faith.  But that‘s not what he is defending hear.  He is acting as if he is defending that.  If that were the case, I would say go for it, sir.  That is bigger than the presidency.  But not many things are.  And he certainly isn‘t.  Nor is, I hate to say it, his particular church or his particular congregation. 

Now, you know, that‘s just the fact of the matter.  He is acting as if this is really about his own ego and his own needs, internally.  It really is, Chris, about his own internal need, something that—issues, as we say, that he has to deal with.  But he is trying to—he realizes that that is awfully ugly to say, I‘m out here to defend myself.  So he says that he is there to defend the black church.  That sounds more noble.  But it is not. 

MATTHEWS:  I don‘t think there is a heartier institution in American life than the black church.  It is crowded every Sunday.  People line up outside.  They get dressed for it.  They believe in it.  They don‘t need one big defender.  anyway, it reminds me of the moral confusion of this campaign.  If you break with the Clintons, you‘re a Judas.  That suggest that Hillary Clinton is Jesus?  There is some moral solar system going on in this campaign that are a little weird. 

MATHIS:  She didn‘t say.  James Carville did.   

MATTHEWS:  Well, OK, Carville thought that he was working for Jesus then. 

JEANNE CUMMINGS, POLITICO:  It is interesting the way he dismissed with what he was doing to Barack Obama was to say, if God wants him to be president, then he will be.  I‘ve got nothing to do with that.  With that, then he went on with his own story. 

MATTHEWS:  Let‘s take a look.  Here‘s Senator Clinton.  By the way, Senator Clinton doesn‘t have to do much these days except pick up the pieces.  She has won lately in Pennsylvania and elsewhere simply by standing there and watching Barack get into trouble.  Here she is with the inimitable Bill O‘Reilly. 

(BEGIN VIDEO CLIP)

CLINTON:  I think it is offensive and outrageous.  And I‘m going to express my opinion.  Others can express theirs.  It is part of, you know, just an atmosphere that we‘re in today. 

(END VIDEO CLIP)

MATTHEWS:  Good scoop there by Bill O‘Reilly.  What do you think, Joan?  This guy gets access, doesn‘t he? 

WALSH:  I know, Chris.  She should be here.  One of these days. 

MATTHEWS:  No, no.  I understand the game being played in this business.  O‘Reilly gets to score fair and balanced, because I think he, like a lot of others, are enjoying this long food fight between the two Democratic candidates, which is worse than a food fight.  I think the Clintons feel that if they go on Fox, they get a certain kind of treatment.  I understand that, because Fox is trying to play this campaign as well as they can.  It is obvious to the observer, I‘m not sure to all observers.  What do you think?  What do you make of that comment by her there? 

WALSH:  I think, first of all, Obama was on Fox this weekend, so she followed up, tit for tat.  And then also, I read the transcript.  He really goaded her quite a bit.  She tried not to take bait.  I‘m sure she eventually intended to.  I think once Obama himself has said it is outrageous, why should she be stopped from saying that?  So I don‘t think she crossed the line.  I think—

MATTHEWS:  No, no.  I think in Pennsylvania, by the way—I‘ve said it before, I‘ll say it louder.  I think when Barack Obama made his crack out there in San Francisco, up there on Russian Hill, wherever he was -- 

WALSH:  I wasn‘t there. 

MATTHEWS:  I know, but up there among the finer folk, making fun of the little folk, I think Hillary Clinton became a Scrantonian that moment.  It looked like she got a GED from somewhere in Scranton, that she didn‘t go to Wellesley, didn‘t go to Yale Law.  It was brilliant, but she exploited it the way any good pol would.   

CUMMINGS:  It is so interesting that he is the elitist in this campaign.  And she, who made 108 million dollars or whatever, and he made one million, he is not—she is not the elitist.  They have played this thing very, very well.  Where they have—she suddenly is the working class girl.  And he is the muckety muck from the --  

WALSH:  It is all about tone.  That‘s right, but she‘s found the right tone and she has found some proposals that are working for her.  And he is doing fine.  The Obamas are making million themselves and they‘re younger.  So everybody is elite here, including all of us having this conversation today. 

MATTHEWS:  Well—Let me ask you, Joan, about the brilliance of Hillary Clinton.  While Barack Obama is out defending himself against the preacher, and his wife has had to join him in this defense, Hillary Clinton is out there at the pump getting gas at four dollars a gallon and saying, I‘ll get you a break on the gas tax and I‘ll pay for it by screwing the oil company.  I agree with you.  That‘s brilliant.  It is easy and it should work for her, right? 

WALSH:  Right.  I think it probably will.  The experts don‘t like it.  Even Paul Krugman came out and slammed her for it.  He has been hard on Obama.  She is pandering, but it sound good to people who don‘t look too closely at the impact either on prices or the environment.  But I think it is good politics, sad to say. 

MATHIS:  That‘s the key, as Joan said, as long as people don‘t look too closely at things.  The fact is that we keep hearing that from one to the other; he or she doesn‘t understand the American people.  They don‘t get it.  Well, the American people on the whole don‘t get macro-economics, either.  What we end up falling for are the quick gimmicks. 

MATTHEWS:  Why doesn‘t she just promise us free gas?  That‘s what—before he went into Iraq, he said the gas will be cheaper because of the war.  Talk about pandering.  They promised us this war—they promised us that the war would be paid for by the Iraqi oil, that we would get cheaper gas.  The promises made into this war were nothing—she‘s a piker compared to this crowd. 

WALSH:  Greeted a liberator. 

MATTHEWS:  Anyway, but I‘m talking about the stuff we get on the side, the tchotchkes we get on the way in and out over there.  Anyway, more with the round table and the politics fix when we come back.  You‘re watching it on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with the round table for more of the politics.  I want to end the show on a note of whatever.  It has to be a turning.  I think the Barack Obama story with Jeremiah Wright may be coming to a crescendo today.  Joan Walsh, it seems to me that he‘s done what he can.  He‘s brought his wife out and she rarely comes out in his defensive mode.  They both sat together for an interview today and they both talked down this story.  He has separated himself from this fellow in a way I never thought he would.  The emotional break emotional break is there.  You can see it in the tragic face of Michelle Obama today.  It seems to me, it‘s now or never; this guy is either bad news and gone news or never going away. 

WALSH:  I think that‘s true, Chris.  We‘ll know more when people vote in Indiana.  It is tragic and I think people are just getting to know Barack and Michelle Obama.  I don‘t think this man represents them, I truly don‘t.  But it may be that he has indelibly attached himself to their image.  I hope not.  I think Obama is better than that.  This may shadow him. 

MATTHEWS:  How can he, Jeanne, say that I‘m the opposite of this guy after attending his church for 20 years. 

CUMMINGS:  Absolutely, it‘s a problem for him.  I think he‘s stuck with Reverend Wright for the duration of the campaign.  I think it will come up by outside groups.  I think McCain will bring it back. 

MATTHEWS:  -- will bring it up.

CUMMINGS:  What he has to do is figure out how he‘s going to manage it, because it‘s not gone, nor will it go away.  Hills and valleys, maybe, but it‘s always going to be there. 

MATTHEWS:  Last word for you, Deborah.  You‘re shaking your head hard. 

MATHIS:  Because I think that people will continue to bring it up.  I understand why.  But I think he‘s transparently the polar opposite of Jeremiah Wright.  He is that in the way he carries himself and the way he speaks and what his message is and what his history has been and what his record is, and what his issues are.  I don‘t know what else you can do.  He even dresses differently.  What else do you say. 

MATTHEWS:  Describe that difference in the sartorial splendor of the two gentlemen. 

MATHIS:  Differences—different, not deficient. 

MATTHEWS:  Thank you very much, Jeanne Cummings.  Thank you, Deborah Mathis, as always.  Thank you Joan Walsh, as always.  Join us again in one hour for the latest NBC News/”Wall Street Journal” poll numbers.  We‘ve got some hot numbers.  Right now, it‘s time for RACE FOR THE WHITE HOUSE with David Gregory.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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